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Community land trusts left in limbo as Homes England funding unexpectedly stops
A number of community land trusts (CLTs) across the country have been left in limbo, with one owing companies large sums of money, after Homes England unexpectedly withdrew funding they had expected to receive through the Community Housing Fund (CHF).
At least 14 CLTs nationally are known by Inside Housing to have had their bids for CHF funding provisionally approved, only to find out later that the government had fully spent the fund, meaning they would no longer receive cash for their projects.
Alan McInnes, chair of Sussex-based Herstmonceux CLT, told Inside Housing that his group was informed in November that their bid for £275,000 had been successful subject to a due diligence investigation, for which they sent off the paperwork within the same month.
However, on 20 December, the CLT was informed that they would not receive funding as the CHF had been fully spent.
Community land trusts are not-for-profit, community-based organisations that build homes at permanently affordable levels for long-term community benefit.
According to the National Community Land Trust Network, community-led schemes share three principles:1. The community is integrally involved throughout the process in key decisions, such as what is provided, where and for who. They don’t necessarily have to initiate the conversation or build homes themselves.
2. There is a presumption that the community group will take a long-term formal role in the ownership, stewardship or management of the homes.
3. The benefits of the scheme to the local area and/or specified community group are clearly defined and legally protected in perpetuity.
Mr McInnes, whose CLT has obtained planning permission to build 19 homes in East Sussex, said the news was “a total surprise” and has left them owing money to various companies involved in the project and having to renegotiate loans.
He said: “With Homes England funding, you have to actually carry out the work and incur the cost before you can claim the money so you can pay your creditors.
“CLTs rely a lot on good faith from suppliers, contractors and specialists... in the future when communities set up CLTs, people may be a bit less keen to help support at that early stage.”
He added: “While Homes England might say they’re hoping with the new budget there will be more money, there’s no real assurance and we can’t progress things with people we owe money to and people we need to borrow money from.”
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There are two types of funding available through the CHF: revenue funding to support the development of community-led housing proposals – including architect fees and feasibility studies – and capital funding to support the costs of building. It is understood that only the revenue funding has been fully spent at this stage.
Steve Hoey, chief executive of support hub and CLT Leeds Community Homes, said he was told by Homes England there were 13 groups in Yorkshire and the North East that had their CHF bids approved locally before being told that the fund had been fully allocated. He said these groups and their projects were now in “limbo”.
The CHF was first announced by the government in 2016, with the expectation that it would be worth £60m annually for five years. However, the bidding did not open until July 2018 and closed last month.
Successful bidders currently have until March 2020 to meet certain milestones in order to release their allocated funding. Homes England has confirmed that decisions about the future of the fund will be made as part of the upcoming Spending Review.
Last month, Inside Housing reported that just 15% of the £163m fund had been allocated as the deadline for bidding approached. However, it is understood that all of the unspent money is capital funding to support the costs of building projects.
Mr Hoey has called on the government to extend the fund and reallocate money set aside for capital funding into the pot for revenue funding.
In December, weeks before bidding for the CHF closed, Homes England confirmed to Inside Housing that it had received 284 applications, of which 194 had been successful, 9 were unsuccessful and 81 were still pending. It is unknown how many successful applications have seen funding pulled.
Catherine Harrington, co-chief executive of the National CLT Network, said: “The CHF has helped to turbo-charge the movement. In just two years, the number of community-led homes planned has tripled to over 16,600 homes.
“But numerous government delays have meant the fund outside of London will only be open for 18 months – a timescale any developer would struggle with.
"What’s worse, some groups which had received confirmation of funding are now being told that the money has run out and that they will not receive anything.
“Effectively the government has created a highly successful fund that has now ended up leading potentially hundreds of volunteer-led community groups up the garden path.
“The National CLT Network is calling on the government to honour their manifesto commitment to support community housing by extending the fund for a further five years as a matter of urgency.”
A spokesperson for Homes England said: “We are working with the Ministry of Housing, Communities and Local Government to clarify the short-term budget position for the CHF.
“Allocations for future years will be considered as part of the government’s spending decisions.”
